House lawmakers have approved a plan from state Rep. Chuck Martin (R-Alpharetta) that would repeal a maximum $5,000 tax credit for consumers who buy or lease electric vehicles and up to $2,500 in tax credits for low-emission vehicles. The proposal is now pending before the state Senate.
The Republican lawmaker says the tax credits first adopted in 1998 are too generous and, if kept, should be expanded to reward other technologies that reduce foreign oil consumption and cut air pollution. That incentive cost Georgia taxpayers roughly $1.1 million in 2012, according to Georgia’s tax officials. The figure may change as the state continues to process tax returns.
Martin said that as electric cars become more popular, state taxpayers will be on the hook for a growing liability.
“I saw an uncapped, overly targeted, too rich credit where if we leave here this year and do nothing, I think that could easily be $30 to 40 million of state taxpayer liability for these credits,” Martin said.
That idea worries car manufacturers and dealers. As a minimum compromise, Martin agreed to roll back the date on which the tax credits would disappear under his plan. Martin has signaled he’s willing to compromise with a longer rollback period. One proposal he’s considering would make plug-in hybrid cars eligible for tax credits, cap the program at 6,000 vehicles annually and gradually reduce the value of the credits until they end in 2015.
More negotiations are expected as Senate lawmakers examine the proposal.
The Republican-dominated House voted to repeal the tax credit on the same day it authorized up to $5 million in additional credits to reward firms that buy heavy-duty vehicles running on alternative fuels.
Democratic lawmakers have argued it’s soon to remove the tax credit.
“Both as a producer and consumer, what we want to do ... is stimulate economic development, facilitate additional job creation and help to clean the air,” said state Rep. Virgil Fludd (D-Tyrone).
Nissan manufactures the Leaf, a car that runs entirely on battery power and is eligible for the tax credits. The company’s director of electric vehicle sales and marketing, Toby Perry, said the tax incentives are reasonable because he believes the Leaf offers benefits to the larger community, including using locally generated power and decreasing oil consumption and air pollution. In Georgia, Leaf owners can also drive in special lanes designated for vehicles with multiple passengers, which could help ease road congestion.
He said the company has not estimated what would happen to its sales if the tax credit disappeared, though it assumed sales would drop.
“The technology is incredibly beneficial to the community, and this helps spread it,” Perry said.